TaxTMI 
TaxTMI 
2020 (2) TMI 1201
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....3. The facts of the case in brief are that the appellant have entered into an agreement with M/s EMU Lines Pvt Ltd., a shipping line to act as their agent for selling space on their ships. For selling this space, the principal namely M/s EMU has a sales tariff which they give to the appellant. The Appellant is also at liberty to sell the space after adding some profit on their own over and above the sales tariff and retain the difference as profit. In addition, the principal M/s EMU also reimburses to the appellant brokerage at a rate of 2% on the freight. The relevant paras of the agreement are as follows: "This deed of agreement is executed on 21st July 2004 between M/s EMU Lines Pvt Ltd., having their registered office at Flat N....
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....n in the trade name of Party No. 1 and Party No. 2 accepts an appointment and agrees to perform the work described above. In performing the work, Party No. 2 shall act as an independent entity maintain its own distinct and separate legal existence and neither Party No. 2 nor its employees / Branch Incharges shall be, or be deemed to be, an agent or employees of the Party No. 1 for any purpose whatsoever. That Party No. 2 has agreed to work as exclusively for Party No. 1, for marine exports under LCL basis, which means Party No. 2 shall not enter into any agreement / arrangement whatsoever relating to marine exports under LCL basis other than Party No. 1 and vice-versa. That Party No. 2 shall indemnify against all claims wh....
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....n. Party No. 1 shall re-imburse to Party No. 2 brokerage @ 2% on the freight and to Party No. 1 by Party No. 2." 4. A show cause notice was issued to the appellant demanding service tax under "Business Auxiliary Service" on the amounts which they have received for acting as an agent of the principal as they have been assisting the principal in their business. After following due process, the original authority confirmed the demand of Rs. 6,64,915/- upon the appellant which he ordered to be recovered with interest under section 75 and imposed a penalty of equal amount under section 78 of the Finance Act, 1994. He refrained from imposing any penalty under section 76 but imposed penalty of Rs. 1,000/- under section 77. 5. Aggrieved, the ....
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....have considered the arguments on both sides and perused the records. A plain reading of the agreement which the appellant had entered into with the shipping line shows that this is not a case of agreement on a principal to principal basis but the appellant is appointed as an agent by the shipping lines for rendering the service of selling their space on their ships. This, in our view clearly falls under the category of "Business Auxillary Service", the definition of which is as follows: "Business Auxiliary Service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or ....
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....urposes of this clause, - (a) "Commission Agent" person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - means any (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services; (b) "Excisable Goods" has the meaning assigned to it in clause (d) of Section 2 of the Central Excise Act, 1....